Revised Residential Tenancies Bill: Changes to the rental sector

The revised Residential Tenancies (Amendment) (No.2) Bill 2018 (the Bill) was published on 11 April, following amendments at committee stage. It is anticipated the Bill will be enacted shortly and commence on 1 July next

Fidelma McManus

Rent Pressure Zone changes

The deliberate flouting by landlords of rental controls in Rent Pressure Zones (RPZs) was one of the catalysts for the Bill. The Bill proposes to tighten measures around RPZs by:

• extending existing rent controls to the end of 2021;

• capturing more areas experiencing high rent inflation by amending the RPZ qualifying criteria; and

• implementing measures to prevent landlords escaping rent control measures.

RPZs are areas where rents are highest and increasing. Currently rents in these areas can only increase by 4 per cent per annum unless they qualify for an exemption. The original RPZs were scheduled to end in December 2019 and there was real concern in the market as to what would happen when they expired. These will now be extended to the end of 2021.

One of the more welcomed aspects of the RPZ amendments is a definition of “substantial improvements”. Previously undefined, it had been an avenue for landlords to try escape the 4 per cent rent cap by imaginative and innovative use of the wording “substantial improvement”.

Such works will now consist of either a permanent extension increasing the floor area by 25 per cent or at least three of the following; (a) a permanent alteration of the internal layout, (b) adaptations for disabled persons, (c) a permanent increase in the number of rooms, (d) an improvement in the Building Energy Rating (BER) by two or more ratings. These new criteria significantly increase the burden on landlords to show that they have carried out a substantial improvement to justify falling outside the rent zone cap and should make it more difficult for landlords to take advantage of that previous loophole.

In order to achieve fairness countrywide revisions are also proposed in respect of the average rent qualifying criterion for RPZ designation. This may lead to additional RPZs being designated.

Improved security of tenure

The Bill seeks to strengthen the security of tenure provisions for tenants by extending the current notice periods set out in Residential Tenancies Act 2004 (as amended) (the 2004 Act). The proposed extension of the minimum notice periods for termination of tenancies by landlord is set out in the table below.

The Bill also strengthens the provisions relating to grounds for termination. Subject to certain conditions, in each of the following cases the property must be re-offered for rent to the former tenant, provided they have given their contact details:

• where termination occurs because the property is to be sold, if the landlord has not entered into a Contract for Sale within nine months of the termination date;

• where a landlord terminates a tenancy because the property is needed for his own occupation or for a family member, if the property is subsequently vacated within one year of termination of the tenancy (currently it is six months);

• where a tenancy is terminated by a landlord due to refurbishment/renovation work, upon completion of the works. Currently if the refurbishment takes more than 6 months, there is no obligation to re-let. An Architect/Engineer’s Certificate is also required to confirm that the works proposed would pose a health and safety risk requiring vacation by the tenants and requiring at least three weeks to complete;

• where the tenancy is terminated because the landlord intends to change the use of the dwelling, if the property becomes available for re-letting within 12 months of termination of the tenancy – currently it is six months.

Complaints and investigations

The Bill introduces provisions allowing for complaints to, and investigations by the RTB. The RTB may appoint “authorised persons” to carry out investigations and prepare reports and “decision makers” to determine what action to be taken on foot of such reports.

Subject to certain conditions, the RTB will be required to cause an investigation to be carried out upon receipt of a complaint of improper conduct by a landlord, or may instigate an investigation of its own volition, which was not provided for prior to the Bill and which has been one of the main criticisms of the RTB since its inception. The types of improper misconduct in respect of which investigations may be caused are set out in the Bill and include non-compliance with termination provisions, rent increase restrictions and the requirement to register a tenancy and to update the register.

Authorised officers will have wide ranging powers to enable them to carry out their investigations and will have the right to apply to the District Court in order to compel compliance by landlords. Sanctions arising from an investigation may comprise any or all of the following:

• a financial penalty of up to €15,000;

• payment of RTB investigation costs of up to €15,000; and

• a written caution.

The RTB is obliged to publish particulars of the sanction imposed and there is a right of appeal to the Circuit Court.

Student accommodation

During the committee stage of the Bill, amendments were introduced to provide that relevant obligations and rights under the 2004 Act will apply to tenancy and licence agreements in accommodation designed specifically for students. Such lettings are currently classed as licences and do not fall within the remit of the 2004 Act. On commencement of the Bill, the 4 per cent per annum rent increase restriction in RPZs, relevant termination provisions, dispute resolution procedures, and registration requirements amongst other matters will apply to student-specific accommodation.

Short-term letting

Late last year the Minister for Housing, Planning and Local Government, Eoghan Murphy TD, announced that he would introduce new rules with a view to regulating short term tourist lettings such as those provided by Airbnb. The Bill now provides for amendments to the Planning and Development Act 2000 (as amended) to regulate short-term lettings of residential accommodation, but only within RPZs. Under the Bill the use of a house or part of a house situated within a RPZ for lettings of periods less than 14 days will be a change of use, requiring planning permission.

Conclusion

One of the major concerns unanswered is whether the RTB will be given the resources to enforce the new inspection and enforcement powers given to it to ensure that the changed legislation is adequately policed and implemented.

The proposed amendments under the Bill are welcome, however only time will tell if the changes will succeed in addressing the key concerns of spiralling rents and the security of tenants in the rental sector.

Fidelma McManus
Partner & Head of Housing
Beauchamps
E: f.mcmanus@beauchamps.ie
T: 01 418 0600